Catalytic converters still dominate SA’s auto components export mix

30th June 2017

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Components exports from South Africa in 2016 were again dominated by catalytic converters.

Data published in the Automotive Export Manual 2017 shows that catalytic converter exports made up 41.3% of all components exports from South Africa by value, earning R21.9-billion, up from last year’s R20.3-billion.

Total components exports from South Africa reached R53-billion in 2016, up from R49.6-billion in 2015.

The weak rand did not play a significant role in the gains made in 2016, says National Association of Automotive Component and Allied Manufacturers executive director Renai Moothilal.

“I don’t think [a] single factor, such as the currency, can be the conclusive reason for any annual export level changes.

“There could be others, such as a recognition of South Africa’s capability as a manufacturing destination and the deterioration of the competitiveness levels of competing components destinations.”

Moothilal says, although a weaker rand will, in theory, always benefit exports, contracts and volumes in the components sectors are negotiated “a fair bit of time” before delivery.

“The contracts are also often foreign- currency-denominated and tend to be multiyear in nature.

Given that a large number of components are exported for assembly into other global vehicle plants, the demand from those plants is also a driver of South Africa’s export levels.”

Engine parts were South Africa’s second- biggest components export product in 2016, at R3.9-billion – having jumped from R2.9-billion in 2012 – with tyres third, at R2.5-billion.

Engines were the fourth-biggest export product, up from R559-million in 2012, to R2.1-billion in 2016.

The increase in the export of engines and engine parts over the last few years is related to engine production for the Volkswagen Polo Vivo, the Polo and the Ford Ranger, with the last two models linked to high-volume export programmes, notes Moothilal.

Two components categories that have seen a sharp drop in export volumes over the last five years are stitched leather seats and silencers and exhausts.

Stitched leather seat exports dropped from R1.7-billion in 2012 to R768-million in 2016, with the German market cutting its sourcing from South Africa significantly.

This decline has its origins in the change-over from government’s Motor Industry Development Programme to the Automotive Production and Development Programme, which saw a move from higher incentives for components with high domestic material content to one which gave more importance to domestic manufacturing value addition, explains Moothilal.

“This would also have coincided with the production move out of South Africa of one of the major seat suppliers, Automotive Leather Company, a few years ago.”

Silencer and exhaust exports have also declined, from R1.7-billion in 2012 to R618-million in 2016.

“One of the long-term reasons for this could be how contracts for catalytic converters are sourced,” explains Moothilal.

“Silencers and exhausts are part of the emission-control systems of a vehicle and the producers of these tend to be the same companies. “At times, export programmes for catalytic converters include the supply of other emissions parts, and sometimes not. “It could be that the current export programmes do not have a prominence of other emissions components. In reality, the major and significant drop in this category happened in 2013/14 already and the numbers have been fairly stable since then, probably reflective of the nature of the current export programme.” Germany is South Africa’s biggest components export destination, at R14.9-billion, followed by the US, at R6.2-billion, and Namibia, at R2.8-billion.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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